Jul 20, 2018
11
1
So I'm entering M1 and trying to decide between federal and private loans. I already know that I am taking out ~$40,000 with the federal unsubsidized loan, now I'm trying to decide whether to take out the remaining COA with grad PLUS or with a private loan. Quick break-down of the loans:
private loan- 5.5% interest rate, fixed, no origination fee
Grad PLUS- 7.08% interest rate, fixed, 4.25% origination fee
Since the private loan has better rates I originally thought I'd go with that, but my school is strongly recommending I go with grad PLUS instead because of the flexibility in repayment options and the loan forgiveness program. From what I've read online and on SDN it seems like it's risky to rely on loan forgiveness given how few people have actually been approved. So my question is, given that the interest on the private and federal loans will capitalize at the same time and the private loan has lower rates, are there really any benefits that should pull me towards grad PLUS instead? Lots of people on SDN seem to recommend refinancing after graduation anyways to get better rates, so am I truly digging myself into a hole if I choose to take out ~$30,000 in a private loan?
Any insight is greatly appreciated, I definitely have a lot to learn about all of this.
 

TMP-SMX

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Grad PLUS is probably safer for now. Your payments will be lower during residency if you pick federal loans than if you have private. Go on REPAYE if you aren't going for PSLF. Don't believe the hype PSLF may not be a 100% bet but it's up there for current borrowers.
 
Jul 20, 2018
11
1
Grad PLUS is probably safer for now. Your payments will be lower during residency if you pick federal loans than if you have private. Go on REPAYE if you aren't going for PSLF. Don't believe the hype PSLF may not be a 100% bet but it's up there for current borrowers.
Thank you for the response!! I appreciate the insight :) I read somewhere on studentloans.gov that seemed to imply grad PLUS loans were not eligible for REPAYE and that only the direct unsubsidized loan would be. However, do you happen to know if the PLUS loan would work with the REPAYE plan? As of now I'm leaning towards doing grad PLUS for the same reason you said- to have lower payments in residency/fellowship.
 

TMP-SMX

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*Parent* PLUS loans can't be consolidated to your own *Grad* PLUS and other Stafford loans as they aren't yours and as you said Parent PLUS loans don't have REPAYE as a repayment option. Grad PLUS loans require you to not have a bankruptcy history to qualify for them (unlike Stafford loans). After completing school you can always consolidate to one single interest rate loan if desired and going for PSLF to attempt to get out of grace period early or to refinance to private loan if desired.
 
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